Commercial real estate has been hit hard in recent years, as was painfully witnessed by investors in publicly traded real estate investment trusts (REITs). Many saw their holdings hammered first by the pandemic and then by rising interest rates.

These real estate dividend stocks need to borrow to grow because their obligation is to pass most of their taxable income on to shareholders as dividends. This makes it difficult for these pools of income-producing properties to retain the cash they need to buy more, well, income-producing properties. The period of high inflation and rising interest rates in 2022 and early 2023 was particularly hard on the industry

But as recession fears began to fade and the Federal Reserve has indicated it may cut rates this year, REITs have rallied even more than the overall market, as the chart below shows.

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Source Fool.com